MEG ENERGY RECOMMENDS THAT SHAREHOLDERS REJECT THE REVISED STRATHCONA OFFER; REAFFIRMS SUPPORT FOR THE CENOVUS TRANSACTION

MEG Energy Recommends that Shareholders Reject the Revised Strathcona Offer; Reaffirms Support for the Cenovus Transaction

  • MEG’s Board of Directors unanimously recommends that MEG Shareholders vote FOR the Cenovus Transaction
  • Revised Strathcona Offer exposes MEG Shareholders to inferior assets, an unproven track record, an overvalued Strathcona share price, significant overhang risk, and governance risk
  • The Special Distribution described in the Revised Strathcona Offer results in a weaker balance sheet and increased financial risk for the combined company compared to the Initial Strathcona Offer
  • Cenovus Transaction accelerates value realization from MEG’s standalone plan, provides shareholders with substantial cash and highly liquid share consideration with lower risk and upside participation in long-term value creation potential


All amounts in Canadian dollars unless specified.

CALGARY, September 15, 2025 /CNW/ – MEG Energy Corp. (TSX: MEG) (“MEG”, or the “Company”) announced today that its Board of Directors (the “MEG Board”) has reaffirmed its unanimous recommendation to the holders (“MEG Shareholders”) of MEG common shares (“MEG Shares”) to vote FOR the Cenovus Transaction (as defined below) and recommends that MEG Shareholders REJECT the revised unsolicited Strathcona Resources Ltd. (“Strathcona”) offer (the “Revised Strathcona Offer”).

On August 22, 2025, MEG announced it had entered into an arrangement agreement (the “Arrangement Agreement”) with Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) (“Cenovus”) under which Cenovus will acquire all of the issued and outstanding MEG Shares in a transaction that values MEG at $28.18 per share on a fully prorated basis at Cenovus’s closing share price on September 12, 2025, representing an enterprise value of approximately $8.2 billion, including assumed debt (the “Cenovus Transaction”).

The Cenovus Transaction provides MEG Shareholders with choice to elect their preferred form of consideration and is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) where each MEG Shareholder will be entitled to elect to receive:

  1. $27.25 in cash per MEG Share; or
  2. 1.325 Cenovus common shares (each whole share, a “Cenovus Share”) per MEG share; or
  3. a combination thereof,

    in all cases, subject to rounding and proration based on the maximum amount of cash and the maximum amount of Cenovus Shares to be provided to MEG Shareholders, as set out in the Arrangement Agreement.     


On a fully pro-rated basis, consideration per MEG Share represents approximately $20.44 in cash and 0.33125 of a Cenovus Share.

On September 10, 2025, Strathcona filed a Notice of Variation, Change and Extension in connection with its Revised Strathcona Offer, offering MEG Shareholders 0.80 of a Strathcona common share (each whole share, a “Strathcona Share”) per MEG Share. As part of the proposal, Strathcona indicated that if the Revised Strathcona Offer is successful, MEG Shareholders would be eligible to receive a proportionate share of the potential “Special Distribution” by Strathcona totaling $2.142 billion, the payment of which remains subject to various conditions and approvals. The Special Distribution would equate to approximately $4.18 per MEG Share at the offered 0.80 exchange ratio. The Special Distribution, if completed, does not deliver incremental consideration to MEG Shareholders as it would significantly increase the leverage of the combined company and reduce its equity value by $2.142 billion, thereby negatively impacting the price of Strathcona Shares that MEG Shareholders would receive under the Revised Strathcona Offer.

“The Revised Strathcona Offer remains fundamentally unattractive for MEG shareholders because it fails to address or adequately compensate for the significant risks embedded in Strathcona Shares,” said James McFarland, Chair of the MEG Board. “MEG shareholders would be exposed to inferior assets, an unproven track record, an overvalued Strathcona share price, significant overhang risk, and governance risk.”

McFarland continued: “In contrast, the Cenovus Transaction delivers an attractive price, upside potential, substantial cash, and value certainty that MEG Shareholders deserve. The Board unanimously recommends that MEG Shareholders vote FOR the Cenovus Transaction.”

“Through our engagement with MEG Shareholders, we have heard overwhelming acknowledgement of the industrial logic of the Cenovus Transaction,” said Darlene Gates, President and CEO of MEG. “We have also heard the majority of MEG institutional shareholders express concerns around acceptance of Strathcona share consideration and the resultant impacts on the trading of the combined company’s shares, with recognition of Strathcona’s inferior asset quality, unproven track record, inflated share price, and the risks associated with WEF ownership.”

 

Reasons to REJECT the Revised Strathcona Offer

The Revised Strathcona Offer consists of unattractive all-share consideration. The MEG Board recommends that MEG Shareholders REJECT the Revised Strathcona Offer for the following key reasons:

  • Inferior Assets and Unproven Track Record. MEG’s Christina Lake is a best-in-class SAGD project with top quartile low steam-oil ratio (“SOR”), cost structure, and significant resource portfolio depth. Strathcona, on the other hand, owns a portfolio of much smaller, geographically dispersed assets with a higher cost structure and oil sands assets that operate at SORs approximately 60% higher than those at Christina Lake. Strathcona has built its asset portfolio through acquisitions and has only demonstrated organic production growth in its now-divested Montney segment, noting that production from its heavy oil segment has decreased by 16% from the levels observed when its acquisitions occurred.
  • Overvalued Strathcona Shares. Strathcona Shares lack trading liquidity, making the quoted market price an unreliable indicator of value and the current quoted price suggests an overvaluation of Strathcona Shares. Third party research notes that Strathcona is “trading at a ~30% premium to its NAV, versus the median E&P in our coverage trades at a discount”1 and, as of September 12, 2025, the median target price of Strathcona Shares among equity research analysts covering Strathcona was below the market-observed trading price of Strathcona Shares.
  • Higher Leverage. Payment of the $2.142 billion Special Distribution described in the Revised Strathcona Offer would significantly increase Strathcona’s financial leverage compared to the initial unsolicited offer and the Cenovus Transaction. With consideration now entirely in Strathcona Shares, MEG Shareholders would be fully exposed to a riskier, more highly leveraged combined company.
  • Significant Overhang Risk. Waterous Energy Fund (“WEF”) has a large, concentrated ownership position which creates material risk of share price decline for the combined company. Having been invested as early as 2016, WEF will soon need to return capital to its limited partner investors and has stated that it intends to do so by distributing Strathcona Shares, which could be subsequently sold, depressing their value.


    “We’re
    going to have to return all of the capital to our investors roughly over the next three years.”
    – WEF’s Managing Partner and CEO, Strathcona’s November 2024 Investor Day


    While Strathcona referenced possible lock-up agreements, it has provided no meaningful detail, including on scope, such as whether distributions to WEF’s limited partner investors would be restricted, duration, and the parties to such lock-up agreements, and MEG cannot determine whether the lock-up mitigates or merely delays the risks to MEG Shareholders. This overhang risk remains significant and unresolved.

  • Governance Risk. WEF would control 48% of the combined company, giving it unique incentives and outsized influence. WEF’s obligations to its limited partner investors present a significant conflict of interest and could result in strategic decisions for the combined company that may not reflect the best interests of minority shareholders, including current MEG Shareholders.

  1. Third party equity research report published on September 9, 2025.


Reasons to Vote FOR the Cenovus Transaction

The MEG Board’s reasons for reaffirming its recommendation to vote FOR the resolution approving the Cenovus Transaction include:

  • Preferred Strategic Alternative After Comprehensive Review of All Alternatives. The Cenovus Transaction was determined to be the preferred strategic alternative to MEG Shareholders following a comprehensive review process. This included assessing a broad range of potential alternatives, including the “Initial Strathcona Offer”, against MEG’s standalone business plan.

    The process involved outreach to over 15 parties, including oil and gas industry participants and financial sponsors in Canada, the U.S., and internationally, and the publicly announced process gave other parties the opportunity to express interest. MEG received three non-binding proposals, including one from Cenovus. Through rigorous negotiations, MEG secured an increase in the Cenovus offer from $25.00 to $27.25 per MEG Share (at announcement) and increased the equity component from 20% to 25%.

  • Participation in Realization of Synergies. The Arrangement Agreement provides MEG Shareholders continued ownership in a prominent SAGD oil sands company and the ability to participate in future upside through ownership in Cenovus, an industry-leading producer with significant scale and growth potential. The combined company will benefit from greater efficiencies and significant corporate, commercial, operational and developmental synergies due to the strong asset fit in the Athabasca region. Cenovus expects to realize approximately $150 million in near-term annual synergies, increasing to over $400 million per year in 2028 and beyond.
  • Superior Upside Potential in Cenovus Shares. Based on median equity research analyst target prices, Cenovus Shares offer a 24% upside to their trading price as of September 12, 2025, compared to the 3% downside price target for Strathcona Shares, representing a difference of 27%. Moreover, 100% of equity research analysts covering Cenovus rate Cenovus Shares with a “buy” recommendation, compared to just 20% for Strathcona Shares. Unlike the Revised Strathcona Offer, the Cenovus Transaction offers MEG Shareholders either the combination of cash and shares, or the option to choose their preferred form of consideration.
  • Accelerates MEG’s Standalone Value. The Arrangement Agreement brings forward substantial value from MEG’s standalone business plan, including the expansion project at Christina Lake. Cenovus plans to spend an incremental ~$400 million of capital between 2026-2028 to accelerate value and deliver production capacity of 150,000 bpd at Christina Lake by 2028, 15,000 bpd above what is expected of the standalone MEG business plan.
  • Certainty of Value and Robust Liquidity: The Cenovus Transaction offers a high degree of value certainty, with 73% of the value of total consideration in cash and 27% in highly liquid Cenovus Shares, as of September 12, 2025. Cenovus Shares will be freely tradeable immediately upon closing. Cenovus Shares have averaged over $450 million in daily trading value year-to-date in 2025, ensuring MEG Shareholders benefit from immediate and reliable liquidity.


Additional information can be found in the Investor Presentation, which is available at www.megenergy.com/offer-update.

 

Recommendation of the MEG Board

The MEG Board’s determination to REJECT the Revised Strathcona Offer followed careful consideration, including advice from its external financial and legal advisors, the unanimous recommendation of the Special Committee of the MEG Board (the “Special Committee”), and have heard feedback from the majority of MEG institutional shareholders expressing strong aversion to receiving Strathcona Shares. After considering such advice, the MEG Board has unanimously reaffirmed its recommendation that MEG Shareholders vote FOR the resolution approving the Cenovus Transaction at the Meeting (as defined herein) and REJECT the Revised Strathcona Offer.

To reject the Revised Strathcona Offer, simply take no action. If you have tendered your MEG Shares to the Revised Strathcona Offer and wish to withdraw, ask your broker or contact Morrow Sodali (Canada) Ltd. (“Sodali & Co.”), the information agent retained by MEG, to assist you with that process. You can reach Sodali & Co. by toll-free phone call in North America to 1-888-999-2785, or to 1-289-695-3075 for banks, brokers, and callers outside North America or by e-mail at [email protected].

 

Cenovus Transaction Meeting and Voting Details

MEG Shareholders will vote on the Cenovus Transaction at a special meeting (the “Meeting”) that will be held on October 9, 2025, at 9:00 a.m. (Calgary Time), in person at Brookfield Place, 225 – 6th Avenue S.W., Suite 1400, Calgary, Alberta or through a live audio webcast accessible at https://meetings.lumiconnect.com/400-560-917-636.

MEG filed an information circular (“Circular”) on September 12, 2025, providing further details on the Meeting and the Cenovus Transaction, including voting instructions, and MEG Shareholders are encouraged to review the Circular. MEG Shareholders are urged to vote well in advance of the Meeting.

Accompanying the Circular is a letter of transmittal and election form containing instructions on how MEG Shareholders can elect their consideration and deposit their MEG Shares. Failure to complete a letter of transmittal and election form prior to the election deadline, being 4:30 p.m. (Calgary Time) on October 7, 2025 (or if the Meeting is adjourned or postponed, no later than 4:30 p.m. (Calgary Time) on the business day that is two business days prior to the date on which the Meeting is reconvened or held, as the case may be) will result in a deemed election by such MEG Shareholder to receive: (i) $27.25 in cash per MEG Share for 75% of the MEG Shares held by such MEG Shareholder; and (ii) 1.325 Cenovus Shares per MEG Share for 25% of the MEG Shares held by such MEG Shareholder, subject to rounding and pro-ration based on the maximum amount of cash and Cenovus Shares set out in the Arrangement Agreement and as described in the Circular.

The information provided herein is supplemental to the information contained in the Circular filed on September 12, 2025 and is being disseminated to MEG Shareholders in accordance with the terms of the Interim Order granted by the Court of King’s Bench on September 9, 2025, a copy of which is appended to the Circular as Appendix C.

Contacts

INVESTORS

Sodali & Co

Toll free in North America at 1-888-999-2785, or at 1-289-695-3075 for banks, brokers, and callers outside North America or by email at [email protected].

MEDIA

Jim Campbell 
Vice President, Communications and External Relations 
T 403.775.1117 
E [email protected]

MEG Energy Enters into Agreement to be Acquired by Cenovus

MEG Energy Corp. (TSX: MEG) ( “MEG”, or the “Company”) today announced that it has entered into an arrangement agreement (the “Arrangement Agreement”) with Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) (“Cenovus”) under which Cenovus will acquire all issued and outstanding common shares of MEG (“MEG Shares”) in a transaction that values MEG at $27.25 per MEG Share, (the “Purchase Price”). 

The proposed transaction (the “Transaction”) to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) represents a MEG enterprise value of $7.9 billion, inclusive of assumption of MEG’s debt, and is expected to close early in the fourth quarter of 2025, subject to customary approvals. 

Under the terms of the Transaction, each holder of MEG Shares (a “MEG Shareholder”) will have the option to elect to receive for each MEG Share:  

  1. $27.25 in cash per MEG Share; or 
  2. 1.325 Cenovus common shares (each whole share, a “Cenovus Share”) per MEG Share; or  
  3. a combination thereof, subject to pro-ration based on a maximum amount of cash and Cenovus shares set out in the Arrangement Agreement.  


On a fully pro-rated basis, consideration per MEG Share represents approximately $20.44 in cash and 0.33125 of a Cenovus common share. The value of consideration payable under the Arrangement Agreement represents a mix of 75% cash and 25% Cenovus Shares. The Transaction is fully financed by Cenovus and is not subject to any financing conditions.
 

Strategic Review

On June 16, 2025, MEG initiated a strategic review of alternatives (the “Process”) which sought to surface an offer superior to the Company’s compelling standalone plan. The Process was approved by the MEG Board which authorized a special committee comprised of independent members of the MEG Board (the “Special Committee”) to oversee the Process. 

After evaluating several alternatives, including continuing with MEG’s previously announced standalone development plan, a comprehensive review of the unsolicited offer (“Unsolicited Strathcona Offer”) from Strathcona Resources Ltd. (“Strathcona”), and proposals received in the Process, the MEG Board has determined that the Transaction is in the best interests of MEG and its stakeholders. 

Benefits of the Transaction for MEG shareholders

  • Significant Premium: The Purchase Price represents a 33% premium to MEG’s unaffected 20-day volume-weighted average share price on May 15, 2025, the last trading day preceding the first public announcement of Strathcona’s intention to acquire MEG. The Transaction is valued at approximately $7.9 billion, including the assumption of MEG’s debt. 
  • Certainty of Consideration: The consideration mix offers a high degree of value certainty, with 75% in the form of cash and 25% in the form of highly liquid Cenovus Shares which will be freely tradeable immediately upon closing of the Transaction. 
  • Upside Participation with Significant Synergies: The Transaction provides MEG Shareholders continued ownership in Cenovus, an industry-leading producer with significant scale and growth potential, which expects to realize approximately $150 million of near-term annual synergies, growing to over $400 million per year in 2028 and beyond through corporate, commercial, operational and development synergies. 
  • Accelerates and De-Risks MEG’s Standalone Value: The Transaction brings forward substantial value from MEG’s standalone plan, including the expansion project at Christina Lake growing production capacity to 135,000 bpd (the “Facility Expansion Project”), which will continue to advance. 
  • Superior to the Unsolicited Strathcona Offer: The Unsolicited Strathcona Offer involves consideration, per MEG Share, of $4.10 in cash and 0.62 of a Strathcona share. The share component of the Unsolicited Strathcona Offer represents approximately 85% of the total consideration and would expose MEG Shareholders to the overhang risk of significant selling from Waterous Energy Fund (“WEF”) and its limited partners which will put downward pressure on the share price, significant governance risks introduced by a controlling shareholder in WEF that may not act in the interests of minority shareholders, and inferior assets. For additional detail, please refer to the Directors’ Circular filed by the MEG Board on June 16, 2025 available at www.megenergy.com/offer-update and on SEDAR+ at www.sedarplus.ca. 

Recommendation of the MEG Board

The MEG Board, informed in part by the recommendation of the Special Committee, and after considering advice from its external financial and legal advisors, has unanimously:  

  1. determined that the Arrangement is in the best interests of MEG;  
  2. determined that the Arrangement is fair to the MEG Shareholders; 
  3. approved the Arrangement Agreement and the transactions contemplated thereby; and 
  4. resolved to recommend that the MEG Shareholders vote in favour of the Transaction at the Meeting (as defined below). 


All directors and executive officers of MEG have entered into voting support agreements pursuant to which they have agreed, among other things, to vote their MEG Shares in favour of and otherwise support the Transaction, subject to the provisions of such agreements.
 

Additional Transaction Details

MEG shareholders will vote on the Transaction at a special meeting (the “Meeting”) expected to be held in early October 2025. The Transaction requires approval by at least 662/3% of the votes cast at the Meeting by MEG Shareholders represented in person or by proxy. Details of the Transaction and the required shareholder vote will be included in an information circular (“Circular”) that MEG expects to mail to the MEG Shareholders and file on SEDAR+ (www.sedarplus.com) in mid-September 2025. All MEG Shareholders are urged to read the Circular once available as it will contain additional important information concerning the Transaction including the deadline for making elections to receive cash and/or Cenovus Shares. 

The Transaction is subject to a number of other conditions including certain required regulatory and government approvals, as further detailed in the Arrangement Agreement, a copy of which will be filed on SEDAR+ (www.sedarplus.ca). 

If you have already tendered your MEG Shares to the Unsolicited Strathcona Offer, you can withdraw your MEG Shares by contacting your broker or Sodali & Co., by toll free phone call in North America to 1-888-999-2785, or to 1-289-695-3075 for banks, brokers, and callers outside North America or by email at [email protected]. 

REJECT THE STRATHCONA OFFER

No premium. No upside. No reason to tender.

MEG Energy Urges Shareholders to Take NO ACTION

MEG Energy Corp. (TSX:MEG, “MEG”, or the “Company”) announced on June 16, 2025, that its Board of Directors (the “Board”) has determined that Strathcona Resources Ltd.’s (“Strathcona”) unsolicited bid to acquire all of the issued and outstanding MEG shares is inadequate, opportunistic, and NOT in the best interests of MEG or its shareholders.

On May 30, 2025, Strathcona made a formal offer to acquire all of the issued and outstanding MEG shares it does not already own for a combination of 0.62 of a Strathcona share and $4.10 in cash per MEG share (the “Offer”). The Offer remains open until September 15, 2025.

MEG’s Board formed a Special Committee to conduct a thorough evaluation of the Offer with the assistance of financial and legal advisors. Following this review and on the recommendation of the Special Committee, the Board has concluded that the consideration to be received by shareholders under the Offer is inadequate, from a financial point of view, to shareholders, is not in the best interests of the Company or its shareholders, and unanimously recommends that shareholders REJECT the Offer by taking no action and NOT TENDER their shares.

NO ACTION is required to reject the Offer.

If you have already tendered your shares to the Offer, you can withdraw your shares by contacting your broker or Sodali & Co, the information agent retained by MEG, by toll-free phone call in North America to 1-888-999-2785, or to 1-289-695-3075 for banks, brokers, and callers outside North America or by e-mail at [email protected].

Why Reject the Strathcona Offer?

The Board filed its Directors’ Circular on June 16, 2025, which provides information for shareholders about MEG’s prospects and the Board’s analysis, deliberations and recommendations. The Directors’ Circular is available below and on SEDAR+ at www.sedarplus.ca. Additional information can be found in the Investor Presentation, which is also available below.

In its Directors’ Circular, the Board details the reasons for its recommendations, including:

  • The Offer’s share consideration exposes shareholders to a company with inferior assets. MEG’s asset portfolio is located in the heart of the Athabasca oil sands region, anchored by Christina Lake, a best-in-class SAGD project with top quartile asset characteristics and approximately five billion barrels of discovered bitumen initially-in-place (“DBIIP”) supporting decades of low-risk, attractive growth. Together with undeveloped resource at Surmont, May River and Kirby, MEG has approximately 11 billion barrels of DBIIP. By contrast, Strathcona’s assets are scattered, lack scale, and are located in less prolific areas with uncompetitive asset characteristics relative to MEG’s Christina Lake.
  • Selling by WEF and its investors to provide liquidity will put downward pressure on the share price. WEF’s concentrated 51% ownership position introduces substantial and prolonged overhang risk, making the combined company a vehicle for WEF and its LP investors to sell their material ownership over time. Strathcona does not have sufficient trading liquidity for WEF and its LP investors to sell their interest in the market. If Strathcona combines with MEG, WEF will have more liquidity to attempt to sell its $6 billion stake. This selling pressure, or even the perceived risk of such selling pressure, will place immediate and significant downward burden on the share price of the combined company for a prolonged period of time.
  • The Offer is inadequate. The Offer lacks a real premium. Its advertised premium was opportunistically calculated as the best and highest implied premium based on Strathcona’s relatively thin trading. Since the announcement of the Offer, MEG shares have consistently traded above the implied value of the Offer, indicating that the market believes it significantly undervalues MEG’s shares. In reality, the Offer of 0.62 of a Strathcona share and $4.10 in cash per MEG share does not represent a premium, but a significant discount when measured over periods other than the single day on which Strathcona calculated the advertised premium.
  • Other paths to superior value maximization. MEG is a uniquely attractive investment opportunity: a pure play oil sands producer with best-in-class assets, an innovative team, and attractive growth opportunities. MEG warrants a premium valuation, which the Offer fails to deliver. MEG’s Board has authorized the Company to initiate a strategic review of alternatives with the potential to surface an offer superior to the Company’s compelling standalone plan.

As noted in the Directors’ Circular, the Board also considered the following:

  • MEG’s standalone plan offers low-risk, visible brownfield growth and free cash flow generation;
  • MEG has delivered outsized returns since its rejection of the previous unsolicited offer in 2018;
  • Shareholders have publicly expressed concerns about the value of the Offer; and
  • All research analysts covering MEG have price targets exceeding the value of the Offer.

Incident Notification

Incident notification – April 30, 2016 – Meg Energy announces that today, at approximately 08:15 hrs, during work carried out on a natural gas well near the village of Edmonton in Alberta.